PERSONAL SPENDING / PCE PRICE INDEX (Reuters)
“U.S. consumer spending and prices rose moderately in
June, pointing to slower economic growth and benign inflation that could see
the Federal Reserve cutting interest rates on Wednesday for the first time in a
decade.” Story at…
CONSUMER CONFIDENCE (PRNewsWire)
“The Conference Board Consumer Confidence Index® rebounded
in July, following a decrease in June. The Index now stands at 135.7
(1985=100), up from 124.3 in June…"After a sharp decline in June, driven
by an escalation in trade and tariff tensions, Consumer Confidence rebounded in
July to its highest level this year," said Lynn
Franco, Senior Director of Economic Indicators at The Conference Board.
"Consumers are once again optimistic about current and prospective
business and labor market conditions. In addition, their expectations regarding
their financial outlook also improved. These high levels of confidence should
continue to support robust spending in the near-term despite slower growth in
GDP." Press release at…
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 dipped about 0.3% to 3013.
-VIX rose about 9% to 13.94.
-The yield on the 10-year Treasury slipped to 2.062%.
Here’s an issue for the markets. Can the S&P 500
break convincingly above its trend line defined by the highs going back to 2018?
I ‘don’t have an answer. We expect a
pullback of some kind, but it seems to be taking its time getting here.
Today there weren’t many changes in the indicators. See
yesterday’s blog for a run down of many of the indicators.
Overall, my daily sum of 20 Indicators slipped from +2 to
zero (a positive number is bullish; negatives are bearish) while the 10-day
smoothed version that negates the daily fluctuations improved from -6 to -4.
(These numbers sometimes change after I post the blog based on data that comes
in late.) Most of these indicators are short-term.
How long do I hang on before cutting some stock holdings?
Bollinger bands and RSI will probably signal the top if other indicators remain
negative.
TOP / BOTTOM INDICATOR SCALE OF 1 TO 10 (Zero is a
neutral reading.)
Today’s Reading: -3
Most Recent Day with a value other than Zero: -3 on 30
July (The S&P 500 was too far ahead of its 200-day average w/sentiment,
top-indicator; the S&P 500 is stretched relative to breadth; the Money
Trend Indicator is stretched relative to the S&P 500.)
(1) +10 Max Bullish / -10 Max Bearish)
(2) -4 or below is a Sell sign. +4 or better is a Buy
Sign.
MOMENTUM ANALYSIS:
TODAY’S RANKING OF
15 ETFs (Ranked Daily)
*For additional background on the ETF ranking system see
NTSM Page at…
TODAY’S RANKING OF THE DOW 30 STOCKS (Ranked Daily)
The top ranked stock receives 100%. The rest are then
ranked based on their momentum relative to the leading stock.
*I rank the Dow 30 similarly to the ETF ranking system.
For more details, see NTSM Page at…
TUESDAY MARKET INTERNALS (NYSE DATA)
Market Internals
remained NEUTRAL on the market.
Market Internals are a decent trend-following analysis of
current market action but should not be used alone for short term trading. They
are usually right, but they are often late.
They are most useful when they diverge from the Index. In 2014, using these internals alone would
have made a 9% return vs. 13% for the S&P 500 (in on Positive, out on
Negative – no shorting).
Using the Short-term indicator in 2018 in SPY would have
made a 5% gain instead of a 6% loss for buy-and-hold. The methodology was Buy
on a POSITIVE indication and Sell on a NEGATIVE indication and stay out until
the next POSITIVE indication. The back-test included 13-buys and 13-sells, or a
trade every 2-weeks on average.
My current stock allocation is about 55% invested in
stocks as of 4 June 2019. This is based on the improved indicators 3 June and
my recommendation to increase stock holdings if we saw strong buying on 4 June.
As a retiree, I am conservatively positioned with a balanced portfolio. You may be comfortable with a higher % invested
in stocks – that’s OK.
INTERMEDIATE / LONG-TERM INDICATOR
Tuesday, the PRICE and VIX indicators were positive; the
SENTIMENT and VOLUME indicators were neutral. Overall, the Long-Term Indicator
is BUY. The indicator is designed to signal Buy after a bottom. At this point, it just means that conditions
have been bullish; I think they may be too bullish and a decline is likely to
be coming.
